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Jamcracker refashions its software pitch

Its dot-com glory days well behind it, the company is taking a new tack with its older message of software as a service.

Jamcracker, a former dot-com high-flier that delivered business applications over the Internet, has recast itself as a software company--but one still committed to its original vision of selling software as a service.

The Santa Clara, Calif.-based company plans to announce on Monday an "on-demand enablement kit," a set of software tools designed to help software makers rework their applications so that they can be offered as a hosted service. The software offering is a significant step in Jamcracker's attempt to break into the software market, following the meltdown of the application service provider market during the tech industry downturn.

In the late 1990s, ASPs emerged as specialized hosting companies that offered packaged applications via subscription over the Internet, meaning that businesses wouldn't have to set up and maintain the applications on their own servers. Companies also refer to these application services as on-demand services or software as a service.

Jamcracker, which was started in 1999 by Exodus Communications founder K.B. Chandrasekhar, originally billed itself as an "ASP aggregator," or an application hosting company that could offer customers access to applications from several providers over the Internet.

It succeeded in signing up more than 100 customers, many of them dot-com companies. But as many of its customers saw their fortunes wane in 2000 and 2001, so did Jamcracker's. The company in late 2002 decided to retrench and create a software product based on its experience in the application hosting field.

At the end of last year, Jamcracker released its packaged software called Pivot Path, a set of tools for setting up and administering hosted applications. With the new on-demand enablement kit, the company is trying to generate sales of Pivot Path to software companies and service providers.

"We 'productized' a lot of domain expertise, which includes operational processes," said Brent Arslaner, vice president of marketing at Jamcracker. "A lot of what we learned from being a pioneer in the ASP aggregator business is that enterprise infrastructure is not built for on-demand delivery."

On top of Pivot Path, Jamcracker's kit includes business modeling tools designed to help software companies work out the pricing and cost structure required for a hosted application business. The kit also includes a "run book" that gives data center operators advice on good application-hosting procedures. Jamcracker charges an up-front license fee or a percentage of follow-on sales, said Arslaner.

Despite the winnowing of the ASP field, the success of and other surviving ASPs indicates a demand for hosted applications, particularly among small and medium-size businesses, according to experts. In a recent survey, research company Summit Strategies found that almost half of respondents use or are seriously considering application hosting offerings.

Rather than try to sell hosted application services directly to customers, Jamcracker is targeting software companies and service providers looking to offer hosted application services.

Kana, a company that sells applications designed to help businesses manage customer relationships, chose to use Jamcracker's enablement kit after deciding that doing so would be a relatively quick way to convert its packaged applications to a hosted model.

It took about five weeks to take the applications and ready them for a hosted delivery model, a turnaround that H.A. Schade, vice president of product management at Kana, called "incredibly fast." Kana started offering its application via subscription in April.

Schade said that Kana chose to offer its applications online because customers were asking for more flexible purchasing options. Using Jamcracker's modeling tools, Kana calculates that the hosted application initiative will become profitable after a full year of operations.

"The ASP business took off with too many companies without a mature view of the business," said Schade. "Those days are over, and now customers have rational expectations for what a true managed service offering is going to be."